What does $SNAP need to do to deliver on the hype? Is there anything that can make $SNAP a good investment for anyone other than the parties involved in trading the IPO?
I tend to be bearish on $SNAP in general, but I'm interested in the discussion. How do they right the ship and boost back up to that $25-30 range? What's their play?
It's not really clear to me, anyway. Instagram has been unabashedly poaching their features and users, and it's working really well. Snap needs to find new ways to continue to differentiate themselves with new features and maybe hardware like Spectacles, but with so much overlap in user-base between Instagram and Snapchat, I have no idea how they'll be able to keep Instagram from continuing to challenge their offerings.
+1 this. I've asked multiple people and ideas are mostly mixed on what Snap's strategy should be going forward. Being a social app will definitely be a difficult play. IMO they could try to leverage their AR expertise to do, well, something. But social definitely seems like it will be tough.
Good luck to the team though. It must be a stressful time there.
Given the product and strategic path they're on the only thing they can do to create value is restart user growth. Their business model depends on them becoming a powerful brand advertising platform (brand advertising is when companies want to spread general awareness of their brands and influence the public's overall impressions of what a company stands for, even if it is far removed from any actual moment of purchase; TV has traditionally been the dominant brand advertising platform, but as cable TV is beginning its decline into irrelevance the top spot is up for grabs). They're not into collecting super detailed info on users, so advertising can't be too targeted, and they're not pushing a shopping angle either.
And in order to become a compelling brand advertising platform they need massive reach (i.e. at least a billion users).
How can they restart user growth? Well, that's probably going to be pretty hard at this point. I suspect they'll need to broaden their appeal from their initial teens/college/just-out-of-college user base to an older and more diverse crowd (just like Facebook and Instagram did). That will probably require some UI redesign to make things a bit more intuitive to navigate, and perhaps other feature changes that make it a more attractive destination.
However, I think it's basically all but impossible for them to restart the growth engine at this point. A lot of people have heard of Snapchat, tried it, and decided they don't like or just don't see the point when they already use Instagram.
Making matters worse is the fact that their initial market is incredibly hard to hold on to. Things almost never stay super popular across multiple "generations" of high school and college kids (except for default utilities that everyone at every age uses). In other words, it's unlikely that Snapchat will be popular with high school and college kids in five years.
So, I suspect that as their metrics stagnate and decline over the next few years they will increasingly focus on a series of moonshot new product ideas (like Specs) and hope that something sticks. But there's little reason to suspect that they'll be any better at building a random new product than any other start-up or big company out there (and, in fact, I'd argue there are some good reasons to think they'll be worse).
As is probably pretty obvious, I'm quite bearish on Snap these days. I was extremely bullish a year and a half ago, but they've just been so slow to execute when it mattered. They lost their wave of growth. At this point, I'd be surprised if they can catch another.
Facebook is an example of a company that continued user growth very well. Facebook was originally just for college students and had a very dating-site-ish feel (at least as I experienced it), but as Facebook grew, they transitioned the platform to accommodate all users from all walks of life, and now their usage numbers are astronomical. I don't see Snapchat doing this very well, their design is very insider-y, their marketing and communications seem to continue to target western millennials, and there's no clear path to adding features or platform dynamics that will bring others in.
Your comment seems very well thought out. Can you expand a bit on why you think Snap would actually be worse at building a random new product than any other startup or big company?
From what I can see, there are three reasons why they are in a worse position to create a new, successful product than any other startup or big company.
1. They are already pretty big and successful. It's extremely hard for companies to really shift focus unless they're truly desperate. Opportunities that are great in the long term usually seem painfully small, or impossibly distant, in the short term, and it's hard to attract and motivate talent internally to these projects.
2. They seem overly confident. This is annecdotal, but they do seem to have a culture that breeds and rewards a bit of cockiness. That doesn't bode well for them rewarding people who push a humbler view of the company and empathize deeply with new kinds of users.
3. Their grand vision isn't very good, and that likely reveals a deeper lack of understanding about life and human nature. From what I understand, their guiding mission is roughly to help people share experiences in real time and more or less live in the moment. The thing is, most people don't want to share all that much of their lives with many people - most people want to escape their own lives most of the time. And for those who do want to share, there are many different more or less equally good ways to do it. Snapchat's core functionality is easily comoditized. There's no benefit to scale for Snap's users, given the company's vision. Yet they don't seem to realize that or care. And that's a critical mistake. It doesn't exactly build confidence in their ability to execute.
That said, the fact that they see themselves as a camera company does bode well. I suspect we will be a much more camera-centric culture in five or twenty years than most people think. And their playfulness is a great way to overcome the creepiness of cameras. They may end up in the right place at the right time to ride that wave.
Regarding your third point....are you sure about that? I feel that many people do want to share the interesting moments (more or less) of their life online. If this wasn't true, Instagram wouldn't be such a popular platform and a threat to Snapchat.
That being said, I'm bearish on Snapchat, at least in the short term. I don't see much opportunity for growth, not unless it manages to capture the hearts and minds of the next budding wave of teens.
Oh for sure, people want to share stuff. It's just a matter of how much, how often, and with whom.
Maybe I wasn't clear. From what I can tell Snap is focused on connecting people in the moment. It's more about giving people a way to share the little adventures of their day with close friends than it is about giving people a way to share a few big events in their week, or giving people a way to broadcast their lives to a mass audience of strangers (they have this functionality but de-emphasize the use case). Facebook and Instagram are more about sharing fewer but bigger moments - though they work okay for sharing more and smaller if that's what you want - they're one of the many good enough options.
I agree with your point about the next wave of teens. And I suspect that will be tricky. That said, maybe if it never catches on with the olds it'll be easier to stay popular? Maybe they can just own the teen chatting niche?
It seems to me like a lot of their "value" is in how much more engrossing their ads can be than other display ads. They also have a whole section of their app that shovels "content" from magazines and such, and that content is pretty much just more advertising. I'm sure those outlets pay to be there, or pay for prominent placing, etc.
But those should be easy enough to copy. And I find the content thing weird, it feels bolted on to an app you use to talk to friends. I am bearish on them, I think it was smart to IPO when they did.
They do AR & Marketing amazingly and hardware quite well. I am not sure a social network is their best business model though. Hopefully they can pivot to something else using what they are great at.
Does "doing AR amazingly" go beyond overlaying bunny ears and whiskers on a person's face? I'm not sure how much longer they can ride that out, and besides, Instagram showed they can do that well too. Actually, anybody who can follow a basic OpenCV tutorial can do it.
Another story on HN shows what developers are doing with Apple's ARkit, and it's more impressive than anything I've seen from Snapchat.
I like to think I'm not totally underneath a rock, but I don't think I've ever seen their hardware in person. And if I have, I didn't know that it was their hardware. So they either don't do hardware well, or they don't market well.
And even if they did all of that well, is that worth $25-30 per share?
They don't. Snapchat is a feature, not a product. They should have sold to Facebook when they had the chance.
Now everything novel they had (expiring message, stories, filters) has been successfully aped by Facebook and incorporated into Instagram, and because Instagram offers a UX that isn't intentionally shitty, they've already shot past the Snap userbase.
Sell your stock now, and don't be surprised if they're irrelevant/bankrupt by 2019.
I was thinking Snap might try to buy Musically before their IPO or around IPO time. It would cost more than IG did to FB, making the purchase a much larger deal for Snap, but it would be a way to allow for the user growth and connectedness to the young crowd to continue. I'm not sure how big Musically is now, just seemed like it might be a decent gamble for Snap to try and prob provide the most [media] hype too.
So they need to do almost everything right and have luck on their side with things like positive acceptance. A betting man prob doesn't like all those bullet points needed.
I tend to be bearish on $SNAP in general, but I'm interested in the discussion. How do they right the ship and boost back up to that $25-30 range? What's their play?